Lehigh Valley's real estate market expected to grow in 2014

Prices also expected to rise, local Realtors group says.

December 29, 2013|By Jennifer Sheehan, Of The Morning Call

The Lehigh Valley's real estate market enjoyed a year of steady growth in 2013.

Home sales were up 15 percent, median sales prices edged up 1.2 percent and the number of days a home sat on the market dropped 13 percent, according to a November report from the Lehigh Valley Association of Realtors.

So what's in store for 2014? More of the same, experts say.

"We can expect to see slow and stable growth," said Ryan Conrad, the association's CEO. "There are still a wide variety of homes on the market, and it's more affordable to buy than rent."

•Existing home sales: According to the National Association of Realtors, home sales nationally have shown a 20 percent increase over the past two years. And the association is expecting the national real estate market to retain the healthy gains seen in 2013.

Building on that improvement in home sales, the Lehigh Valley should see an additional increase of 3 percent in 2014, predicts Brad Patt, senior vice president and region manager for Berkshire Hathaway HomeServices Fox & Roach.

•Prices: Home prices are expected to rise in 2014. The national median home price for 2013 is up just over 11 percent, to about $197,000 and is expected to increase nearly 6 percent in 2014, the National Association of Realtors reports.

Overall in 2013, the Lehigh Valley did not see a similarly big swing in prices. The Lehigh Valley Association of Realtors put the median home sale price in 2013 at $170,000, which is up just 1.2 percent over the previous year.

Patt said the national average takes into consideration markets that saw huge busts (Las Vegas, Florida). This year, as a result of the improving economy, those markets saw bigger gains.

"We didn't have the boom and the bust that they did," Patt said. "We will continue to see the appreciation that's more stable and the recovery here is showing signs of that stability."

Patt expects the Lehigh Valley's median home prices to climb 3 percent in 2014, building on this year's gains.

The Lehigh Valley's "months inventory of homes" — which represents how many months it would take to sell all the homes on the market — stayed around the six-month mark through the year, putting the market in equilibrium, meaning it favors neither the buyer nor the seller.

Under this equilibrium, sellers see appreciation on their homes, yet prices are not running away from incomes, which preserves affordability for first-time home buyers.

"Below six months and you're in more of a seller's market," Patt said.

•Days on the market: Conrad said he's expecting the number of days a home is on the market to continue to drop in 2014. According to the Lehigh Valley Association of Realtors, the number of days a home was on the market in 2013 was 71, down from 82 in 2012.

"It speaks to the inventory," Conrad said. "There are fewer homes to choose from and that will drive up demand."

•Mortgage rates: The National Association of Realtors is expecting mortgage interest rates to trend upward and reach 5.4 percent by the end of next year.

Patt said rates are still quite good, considering the heights to which they have climbed historically.